THE BLOG

GM Saves Energy With Smart IT

Apr 04, 2011 | Updated Jun 04, 2011

Opportunities for improving energy efficiency -- and saving real money -- are everywhere. The proverbial low-hanging fruit are actually, in the words of energy guru Amory Lovins, fruit on the ground. GM recently announced a new way to find easy pickings, a shockingly straightforward change in how it runs its manufacturing plants. The auto giant is saving $3 million annually in energy costs across 10 plants by shutting down equipment when it's not needed.

When I reached out to GM to learn more about its new automation scheme, they put me in touch with Mike Durak, the Global Program Manager, IT. The fact that they suggested an IT exec, and not a plant (or environmental) manager, says a lot about this story.

So here's the scoop. GM is using GE software to automate the shutdown and restart of its equipment (I didn't know GE was in the operational software business, but live and learn). It started simply enough -- GM set the lighting in one plant to synch up with the conveyor. When the manufacturing line stopped, for breaks or between shifts, the lighting would shut off (allowing a few minutes for people to leave). Seeing the quick payback, the managers added all energy-using systems to this automated network, from heating and cooling systems to pumps and compressed air units. The investment in connecting an entire plant is paying back through energy savings alone in just 6 months.

If you're wondering how the factory handled its equipment shutdowns before this -- and they happen multiple times a day, at mandated breaks, at lunch, and even for entire nights if a plant is running only two eight-hour shifts -- Durak tells me that the process was a combination of manual shutdowns and unconnected, or "dumb", automation. Basically, energy use would gradually ramp down after production stopped as equipment was shut off, and then it would ramp back up before the next shift. "Energy use was in a 'V-shape'," Durak said, "and now it's more like a U." (For the non-tech geeks and engineers out there, the difference between a V-shape and a U-shape is what's saved).

This new automated network is a clear operational improvement. I call these sudden wins "headslappers" because they're so obvious...in retrospect. As Reuters originally reported it, "it's a wonder nobody thought of it before."

The reasons we miss these easy wins are varied -- from inertia to not being incentivized to find them to the classic problem of always addressing what's urgent (something broken or a new process) over what's important (getting leaner). Or perhaps a simple, cheap technological fix was not available until recently.

In GM's case, the big change is economically networking a whole range of equipment that wasn't connected before. So with the new systems in place, managers can use the GE software to monitor and control the plant to a much finer degree.

IBM has made its branding mark by owning the idea of a "Smarter Planet," but the GM story fits that "smarter" mold well: they are figuring out what a "smarter" factory looks like. I'll admit to having been hard on GM in the past -- I believe the company seriously missed the global market shift to smaller, more energy-efficient cars. But lately, the company has been on a bit of a tear (as has Ford for that matter). The Chevy Volt seems like a legitimate player in the electric car race, and the company is finding operational savings in energy and waste reduction worth billions.

This new software/networking solution is another great step. The immediate energy savings are solid, but even more important will be the benefits that come from leveraging a completely networked factory. The operational, financial, and environmental wins have likely just begun.

This post first appeared at Harvard Business Online.